Bloomberg News

Coffee Exports From Vietnam May Climb in February on Weather

February 14, 2012

Feb. 3 (Bloomberg) -- Coffee exports from Vietnam, the biggest grower of the robusta variety used in instant drinks and espressos, may increase this month as good weather helps beans to dry and as the Tet holiday ends, said traders and officials.

“It’s been easier for us to buy coffee from farmers in the last few days,” said Le Tien Hung, deputy director of Sept. 2nd Import-Export Co., known as Simexco, based in Dak Lak, the biggest growing province. “Favorable weather had helped farmers dry their beans, so they are ready to sell more now,” Hung said by phone yesterday. Simexco is the second-biggest shipper.

Robusta, used in products by Nestle SA, slumped 20 percent in the past 12 months as global harvests increased for a fourth year. Rising output in Vietnam, Brazil and Indonesia is set to boost supply at a time when a sovereign-debt crisis in the euro zone may hurt consumption in the European Union, which represented 56 percent of demand from importing members of the International Coffee Organization in 2010.

February may be “the peak” month for exports after sales stopped during the Tet holiday, according to Nguyen Ngoc Thu in Ho Chi Minh City for Madrid-based Icona Cafe, among the top 10 buyers of Vietnamese coffee. The nation celebrated the Lunar New Year holiday, known as the Tet festival, from Jan. 23 to Jan. 27.

“Bigger sales will narrow the differentials,” said Thu today. Those are the premium or discount for physical coffee in relation to futures.

More Exports

Dak Lak province will have drier weather with some sunny periods between Feb. 1 and Feb. 10, the Dak Lak Meteorology and Hydrology Department said in a report emailed yesterday.

Sales from Vietnam are set to rise “significantly” in the next three months, according to analyst Keith Flury at Rabobank International in London. The country will harvest a record 21.5 million bags in the season ending Sept. 30, said Flury. Exports from the country may reach 4 million bags, or 240,000 metric tons, in the first quarter, the bank estimates.

Shipments may have totaled 130,000 tons in January, according to a preliminarily estimate yesterday by the General Statistics Office in Hanoi. The nation exported 156,000 tons in December, the data show. The sales pace may slow after February as farmers wait for a better view of prices, said Simexco’s Hung.

The government asked coffee companies “not to sell forward when they don’t have actual coffee,” Deputy Minister for Agriculture and Rural Development Diep Kinh Tan said Oct. 19. Many companies signed forward contracts after the last crop, Tran Hieu, vice chairman of the Provincial People’s Committee in Dak Lak, said Sept. 30. When the price went up, they found it hard to meet commitments, Hieu said.

--Nguyen Dieu Tu Uyen. Editor: James Poole

To contact the reporter on this story: Nguyen Dieu Tu Uyen in Hanoi at uyen1@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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